The European Commission, the European Union’s market regulator, announced on Tuesday (9) that it will investigate the investment relationship between Microsfot and OpenAI. The big tech owns 49% of the shares of the creator of ChatGPT and a great deal of decision-making power in the company. The EC will assess whether the relationship between the two companies fits with EU merger regulations.
At the end of 2023, the CMA, the UK body responsible for market regulation, also opened an investigation to understand what Microsoft’s true role in OpenAI is. These investigations do not come about by chance. After Sam Altman was fired and then reinstated as CEO, Microsoft gained a seat on OpenAI’s board and will be closer to OpenAI’s decisions.
Microsoft and OpenAI: Is it acquisition or friendship?
As previously stated, Microsoft owns 49% of OpenAI. The rest is from OpenAI, or rather the non-profit organization OpenAI, Inc. The party created to make profits and investments is OpenAI Global, LLC. This company is the one that is the target of the investigations.
In theory, Microsoft can’t vote at board meetings. The CMA and the EC want to find out if in practice the theory is different. Big tech’s entry into the board will also give it access to confidential information.
As much as the CMA and the EC are different bodies, in the end, their goal is practically the same: to understand whether Microsoft’s role on OpenAI’s board and management qualifies as a merger or acquisition.
The relationship between the two companies is very close. Since 2019, Microsoft has invested at least $13 billion dollars in OpenAI. This partnership has even led to the development of artificial intelligence tools for Bing and Windows (Copilot) that use GPT technology, created by OpenAI.
2024 has barely begun and it seems that we already have a new soap opera involving Microsoft and regulatory bodies. Refreshing your memory, the CMA even blocked the acquisition of Activision Blizzard by big tech — but approved the purchase after the appeal.